For Japan's bevy of hard-up insurers, paying a large premium to acquire a U.S. rival, even one facing falling operating earnings, outweighs most negatives.

Sompo on Wednesday become the latest to take advantage of the strong yen to finance its search for growth, agreeing to buy Bermuda-based insurer Endurance Specialty Holdings for about $6.3 billion. It's paying $93 a share cash, 43 percent more than Monday's closing price of $64.96.

While that's around the level other Japanese insurers have been paying for overseas assets, it's well above the average 33 percent premium companies from the nation pay overall for M&A deals, and much higher than the 14 percent average paid by U.S. corporations when they shop offshore for insurance firms, according to data compiled by Bloomberg.

The transaction does help Sompo escape Japan's shrinking and aging population, and negative interest rates. Japanese 10-year government bonds yield minus 0.048 percent versus 1.71 percent in the U.S.

Offshore Cover

Acquisitions by Japanese companies of insurance firms overseas reached a record last year

Source: Bloomberg

After the deal, Sompo should be able to generate about 25 percent of its earnings from overseas, compared with a current forecast of 9 percent, Bloomberg Intelligence analyst Steven Lam reckons. That will allow Sompo to catch up with bigger property and casualty players Tokio Marine and MS&AD Insurance Group.

Playing Catch Up

Sompo's acquisition of Endurance should bring its overseas earnings more in line with its peers

Source: Bloomberg Intelligence

Note: Profit forecasts are for year ending March 31, 2017.

As the world's largest insurance market, North America is fertile ground. The U.S. currently accounts for about 5 percent of Sompo's overseas net premiums versus 62 percent at Tokio Marine and 28 percent at MS&AD, Jefferies research shows.

There are some downsides. The transaction will expose Sompo to the reinsurance market, and that's not the happiest place right now amid record-low interest rates. Competition for business is fierce, with even hedge funds like David Einhorn's Greenlight Capital piling in.

Endurance second-quarter operating income

-31.1%

Endurance also recorded a 31 percent drop in second-quarter operating income, as the Fort McMurray wildfires in Canada, storms in Texas and an earthquake in Japan took their toll.

A rising yen is another potential pitfall. Sompo, which agreed to acquire Canopius of the U.K. in December 2013, can't be finding that foray too pleasant considering the pound's performance post-Brexit.

Still, with precious little growth on its own doorstep, such hardships are something Sompo must necessarily endure.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.